Round bale costs part of managing profit margins for some beef producers

Monday, August 8, 2016

Although round bales have been popular with beef producers for many years, there are many challenges to buying, producing and using round bales correctly and cost effectively.

“Beef producers who do not know the weight, storage and feeding losses associated with round bales cannot possibly know the true cost of hay nor manage the quantity of hay consumption and cow herd nutrition,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

Round bales are often priced by the bale but the amount of hay in a bale depends on bale size and density. For example, consider a round bale that is 5 feet wide and 6 feet in either diameter or height, and priced at $52.50 per bale.

“If the bale weighs 1,500 pounds, the price is equivalent to $70 per ton,” Peel said. “A comparable 5-feet-by5-feet square bale with equal density would weigh 1,046 pounds and be priced at $36 per bale, which also works out to $70 per ton. A 4-feet-by-5-feet bale with equal density would weigh 833 pounds and be priced at $29 per bale.”

The density of round hay bales varies considerably and typically ranges between 9 and 12 pounds per cubic foot. In the example above, the bales are assumed to have a density of 10.61 pounds per cubic feet. Bale density varies depending on the type of forage, adjustment of the baler and skill of the baler operator.

“Bales with lower density weigh less, are more difficult to handle and transport and have more storage losses,” Peel said. “If the 5x6 bale in the example above has a density 10 percent less, the bale weighs 1,350 pounds; a density 15 percent less results in a bale weight of 1,275 pounds. If the 5x6 bale is priced at $52.50 per bale, the per-ton price increases to $78 and $82 for the lower density bales.”

Round bale use inevitably results in storage and feeding losses. Hay loss with round bales varies widely depending on storage and feeding management.

“Well-managed bale storage and feeding might limit losses to 10 percent but combined storage and feeding losses frequently range up to 50 percent or higher,” Peel said.

Round bales stored outside, uncovered and on the ground and fed in unrolled, exposed bales or in simple open-sided ring feeders will experience the greatest losses, easily in the 30 percent to 50 percent range. In contrast, bales stored inside or covered, off the ground and fed unrolled or in cone style feeders can limit losses to 5 percent to 15 percent.

In addition, the amount of hay actually consumed by cattle drops dramatically with increased storage and feeding losses.

“At 10 percent loss, hay consumption is 1,800 pounds for each ton of hay; at 25 percent loss, hay consumption is 1,500 pounds; and at 40 percent loss, hay consumption is 1,200 pounds,” Peel said.

Assuming $70 per ton, storage and feeding losses increase the effective hay price to $78 per ton at the 10 percent loss level, $93 per ton at the 25 percent loss n level and $117 per ton at the 40 percent loss level.

Storage and feeding losses combined with low bale density increases hay price further. The low-density 1,275-pound bale above results in a hay cost of $91 per ton at the 10 percent loss level, $110 per ton at the 25 percent loss level and $137 per ton at the 40 percent loss level.

“The combination of low bale density and high storage and feeding losses result in an actual hay cost nearly double the stated per-ton price of hay,” Peel said, “and that doesn’t account for perhaps the most important aspect: hay quality. The true cost of hay ultimately depends on the pounds of crude protein and energy delivered to the animal.”